The hedge-fund delusion that grips pension-fund managers
Most hedge-fund managers are not good enough, on average, to offset their high fees
HEDGE-FUND managers may be feeling quietly smug about their performance in 2017. They returned 6.5% on average, according to Hedge Fund Research, a data provider, their best year since 2013.
But those returns do not really suggest that they are masters of the investing universe. The S&P 500 index, America’s main equity benchmark, returned 21.8%, including dividends, last year. More tellingly, a portfolio split 60-40 between the S&P 500 and a mixture of government and corporate bonds (an oft-used benchmark for institutional portfolios) would have returned 14.8%. Last year was the fifth in a row when hedge funds underperformed the 60/40 split (see chart).
This article appeared in the Finance & economics section of the print edition under the headline “The hedge-fund delusion”
Finance & economics January 20th 2018
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- The hedge-fund delusion that grips pension-fund managers
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